State Theory and the Dependency Principle: An Institutionalist Critique of the Business Climate Concept

In the continuing literature on state theory and political power, "the dependency principle" has gained wide acceptance among political scientists and sociologists as an important concept for explaining the symbiotic relationship between state elites and the capitalist class.1 The dependency principle asserts that the decision-making power and policy capabilities of the state in capitalist society are, for various reasons, dependent upon the success and continuity of the capital accumulation process. Therefore, state elites must adopt policies that enhance "business confidence" in the short run and that promote a favorable business climate over the long run.2 In more stringent applications of the principle, theorists such as Nicos Poulantzas and Claus Offe argue that the state's dependency on capital is "so absolutely compelling as to turn those who run the state into the merest of functionaries and executants of policies imposed upon them by 'the [capitalist] system"' [King 1986, 77].3 Even in less stringent formulations of the concept, theorists such as Fred Block [1977, 6-28; 1980, 227-42], Stephen Elkin [1987, chap. 2], and Charles Lindblom [1982, 32432] suggest that the "privileged position of business" in a market economy systematically promotes a natural alliance between state elites and the capitalist class. Where state elites promote a favorable business climate with public policy, they will be rewarded with high rates of private investment, economic growth, and employment stability. Interestingly, even though the dependency principle has been formulated by liberal and radical state theorists, its explanatory power relies on the assumption that